• FERC Rejects Army Corps' Challenges on Complying with Reliability Standards
  • January 15, 2010 | Authors: Amie V. Colby; Kevin C. Fitzgerald; Peter S. Glaser; John Robert Varholy
  • Law Firms: Troutman Sanders LLP - Washington Office; Troutman Sanders LLP - London Office
  • On January 5, 2010, FERC rejected the Army Corps of Engineers’ (the “Army Corps”) petition for rehearing as untimely and upheld its ruling that the Corps must comply with mandatory standards developed by the North American Electric Reliability Corporation (“NERC”).  As such, all users, owners, and operators of the bulk power system, including federal entities, must comply with NERC’s mandatory standards.
     
    In their request for rehearing, filed on November 16, 2009 and amended on November 25, 2009 (see December 14, 2009 edition of the WER), the Army Corps stated that the Commission’s order was procedurally defective because the Commission’s Rules of Practice and Procedure do not allow for declaratory judgments in a Notice of Penalty proceeding.  The Army Corps also claimed that the Department of Justice’s Office of Legal Counsel is the proper forum for disputes between federal agencies.  Lastly, the Army Corps argued that neither they nor Congress has waived sovereign immunity, and the Army Corps pointed out that FERC’s final order never addressed this argument.

    The Commission noted that the Army Corps filed its petition for rehearing at 5:47 PM on November 16, 2009, the last day for filing.  However, since the petition was filed after normal business hours, it was deemed to have been filed on the next business day, pursuant to the Commission’s Rules of Practice and Procedure.  Since the 30-day time period cannot be waived, the Commission rejected the Army Corps’ petition as untimely.  However, the Commission also determined that even if the petition was filed on time, the request would have failed on the merits.
     
    In discussing the merits of the case, the Commission rejected each of the Army Corps’ arguments.  First, the Commission found that its prior order was not a declaratory order but rather an order that addressed a specific issue relevant to the proceeding at hand.  Second, the Commission, and not the Department of Justice’s Office of Legal Counsel, is the proper forum for the dispute because the Commission is vested with the responsibility for determining who is subject to NERC’s mandatory standards.  Finally, the Commission stated that it did not address sovereign immunity issues previously because the Commission ruled on a jurisdictional issue; it did not determine if it has the right to bring a civil or administrative action against the Army Corps.  Even if the Commission’s prior ruling did implicate sovereign immunity issues, the Commission determined that they would have been explicitly waived under section 215 of the Federal Power Act.  As such, each of the Army Corps’ arguments were rejected.

    The Commission’s order can be found on its website at www.ferc.gov under Docket No. NP09-26.